CTCM stock: value investing buy alert?
Once In a period I locate real value investing idea, do a little research and put money. But for the first time, it's a Russian company. So this is how I come up with CTCM, which is CTC company. First of all, in short, we are facing with a company which run 3 television channels in Russia. Company headquarter in the U.S.
So what makes it value investing?
First, I would put a "highly danger" on the value investing scale. This is because the company has dividend yield which is so night that makes me think more then a week how to deal with it. But in the and I came up with "buy" conclusion. Here is why:
The company book value per share, based on the last report is 5$ A share. The current price of a share is 8.5$. Which gives us price to book of 1.75. The less the number the best it is.
PE ratio is sensible - 8.87
Let's put is on benjamin graham formula just to make sure of not exceeding 22. So 8.87 multiple by 1.75 gives us 15.5. Hey! Margin of safety is in
Let's move the a core issues which is earning: the company posted EPS of 97 cents for 2013. The question should be- is it good or not? let's connect the dots:
Other parameter i find useful is Cash flow from Operating activities. Why it's so important? this parameter shows the amount of money the company brings to the shareholders from ongoing (the regular) business. no tricks in it!
|Year||Cash flow provided by operating activities||Growth|
If we covered the cash flow data, we must cover the net income data. Let's do it:
We can see that the growth in net income is better than Cash flow growth. I'm OK with that, as long as it this way and not the contrary.
The revenue on the other hand growth slower that the net income, that means the company get efficient from year to year:
Next issue will be the shareholders equity. This is the safe side of investing. Am i covered or not in case of catastrophic case. I want the shareholders equity to be close or less to market cap. in CTCM it was obvious that it's not the case, since i never come up a company with 8% dividend with no long term debt. Anyway, as noted above, the P/B is 1.5. but does the company succeeded with increase the shareholders safe side? let's check it out:
Positive, but not the best result, but i can live with it. i prefer banks with increase of 5-7% on this issue.
what about the dividend you might ask?
The conclusion should be this:
Investor pay price, get a value. at the past the price was high. Now the price is sensible. More than sensible.
Disclosure: I am long CTCM.